The service, at 21-23 Yuille Street, will help clients from Chelsea, Frankston and the Mornington Peninsula recover from mental illness when it opens early in 2012.

The Peninsula Health Mental Health Service will establish and manage the Frankston Youth Prevention and Recovery Care Service, and Peninsula Support Services and Mind will provide staff experienced in rehabilitation. Peninsula Health spokeswoman Jan Child said: "There is a growing need on the peninsula for youth-oriented mental health services.

"The $4million funding of this Youth PARC by the state government responds to these needs and expectations. Consultations and information programs for neighbours and the local community will continue until the service opens."

The service will cater for people aged 16-25 by providing an alternative to community and hospital treatment. The average stay will be about two weeks, but can go up to 28 days. Residents will be selected according to their suitability to be in a small unit.

Mind offers services to assist people in their recovery from a mental illness and to secure safe and stable accommodation. Peninsula Support Services is a not-for-profit organisation that provides support rehabilitation, intensive outreach and home-based outreach services to people with mental illness.